Iraq: A Shocking Waste of Money

By Matthew Yglesias, The American Prospect. Posted June 27, 2006.

On September 11, 2001, the United States was hit by devastating terrorist attacks perpetrated by a transnational terrorist network. Less than a year later, it was apparent that the Bush administration wanted to invade Iraq, allegedly as part of the response. Famously, selling this agenda involved a highly deceptive effort to link the two issues. Iraq was said to have an advanced nuclear weapons program and to be likely to provide the fruits of its research to al-Qaeda.

All this we know. Less well remembered nowadays, though -- in fact, almost never discussed in the major media -- was another implicit prong of the argument: that invading Iraq would be cheap and easy, leaving plenty of resources for other purposes. When White House economic adviser Lawrence Lindsey stumbled off message in September 2002 with his prediction that war could cost $100 billion to $200 billion, the administration flew into crisis mode. Budget Director Mitch Daniels was trotted out to label the estimate "very, very high." Deputy Defense Secretary Paul Wolfowitz opined -- in testimony to Congress, no less -- that reconstruction would cost virtually nothing in light of Iraq's promising oil revenues. Daniels proffered an estimate in the $50 billion to $60 billion range, substantially less than the $80 billion inflation-adjusted cost of the Persian Gulf War. Lindsey, famously, was soon after fired -- for his troublesome cost estimates and, reportedly, the President's annoyance at his poor personal fitness habits.

By April 2006, a Congressional Research Service (CRS) inquiry concluded that Lindsey's estimate was, indeed, way off -- but in the other direction. Around $261 billion had already been spent. Given the human stakes, it may seem crass to worry overly much about the dollar cost of a military conflict. But the fact that a CRS report is needed at all, as opposed to the straightforward accounting that either the White House or the Pentagon could surely provide were they so inclined, points to the basic reality that the war's proponents are continuing the prewar pattern of covering up the costs. And with good reason: They're enormous. Scandalously enormous.

The same CRS report indicated that before it ends, the war will likely cost somewhat more than the $549 billion spent (adjusted for inflation) in the much more lethal Vietnam War. But even this figure will likely prove to be off by hundreds of billions of dollars because it accounts only for funds directly appropriated for war fighting. As Linda Bilmes, a leading Harvard budgetary expert, and Nobel Prize-winning economist Joseph Stiglitz point out in their January 2006 paper, "The Economic Costs of the Iraq War," the spending captured by the CRS, even in strict budgetary terms, is "only the tip of a very deep iceberg."

Wartime appropriations do not, for example, include the cost of disability payments to veterans wounded in the war, payments that will continue throughout their life spans. Nor do they cover the costs of medical treatment for those seriously injured in the war, or even such basic war-related costs as the replacement of equipment and munitions expended in the conflict or the need to transport soldiers back to their home bases when they rotate out of country. The war has also substantially increased the military's overall recruiting costs, reflected in bigger bonuses and additional recruiters. What's more, by combining the war with aggressive tax cutting, the administration has ensured that the operation is paid for entirely by borrowing money on which interest will need to be paid. The shocking truth, according to Bilmes and Stiglitz, is that if one applies the Congressional Budget Office's basic assumptions about the duration of the conflict ("a small but continuous presence"), it will cost nearly a staggering $1.27 trillion dollars before all is said and done.

The number is so high as to defy human comprehension. All the numbers ending in "-illion" sound the same. But a trillion is what you get if you spend a million dollars a day ... for a million days. That's 2,737 years -- a cool mil a day, every day, in other words, until the Year of Our Lord 4743. Or, working backward, from the time when Homer wrote the Iliad up to now.

The $270 billion in rounding error is worth another 750 years at the million-a-day rate. That takes us up to the year 5493 -- or back to when Moses fled Egypt.

Anyway you slice it, it's a lot of money. More than enough to fund any sort of "too expensive" pie-in-the-sky liberal domestic scheme. Universal preschool, for example, clocks in at about $35 billion annually -- cheap enough to get 37 years' worth. But Bush never said invading Iraq would educate our children or fight domestic poverty, so let's not even get into that, for now.

What the President did promise was the following: that regime change would curb nuclear proliferation, weaken al-Qaeda, and create a shining beacon of democracy. What happened? We eliminated a nuclear program that didn't exist, encouraged Iran and North Korea to speed theirs along, offered terrorists a gigantic recruiting opportunity and training ground, and turned Iraq into a venue for chaos and civil war plagued by death squads and offering local despots a handy cautionary tale about the dangers of liberalization.

For $1.27 trillion, we have our hands full in a quagmire; the world hating us; worldwide acts of terrorism on the sharp rise; and much more. We could have done better. Much better. You might even say a trillion times better. Economists use the term "opportunity cost" to refer to the cost of an endeavor in terms of the opportunities that endeavor foreclosed. Iraq foreclosed advancing important humanitarian goals, killing and capturing terrorists more effectively, eliminating nuclear threats, and securing the homeland among other goals. Here are 11 ways it could have been different -- and still could be, come January 20, 2009.

1. Military Transformation

The American military is, by global standards, enormous and remains without a doubt the world's top fighting force. Nevertheless, it's still mainly geared for Cold War-era threats and countering conventional foes. The new world has less need for heavy weapons, but more need for special forces to hunt down and eliminate small groups of radicals and various types of boots on the ground to help bring stability to chaotic areas. Echoing John Kerry's presidential campaign, the Center for American Progress's liberal alternative to the official Quadrennial Defense Review (QDR) proposed increasing the authorized strength of the U.S. Army substantially. The idea is to add 50,000 special-operations forces to fight the new kind of battles, plus 26,000 soldiers for two new peacekeeping divisions, and 10,000 additional civil affairs and military police officers. That way, if the United States ever did come across a legitimate reason to mount an Iraq-scale stabilization we might have the chance to do it properly. The price tag over the life of a QDR is $60 billion.

2. Nuclear Materials

The threat of nuclear terrorism was the most potent argument raised in favor of the Iraq War, and understandably so. Conventional terrorist attacks, though tragic, can't fundamentally threaten the United States in the way our great adversaries of the past did. A single nuclear detonation in an American city would, however, be a catastrophe in terms of its death toll and the inevitable crackdown on civil liberties. The American way of life as we understand it would never be the same. There were, of course, no nuclear weapons in Iraq and no program to make them. But there is plenty of fissile material in the former Soviet Union. The good news is that our government has programs in place to remove them that have been rated highly effective. The bad news is that they're working slowly. The 2001 Baker-Cutler Commission on the subject estimated that $30 billion over 10 years would get the job of destroying much of it and securing the rest done expeditiously.

3. The Other War

Remember Afghanistan? The place where the old regime actually was harboring al-Qaeda, and we really were welcomed as liberators? We never quite finished off the enemy there, and recent weeks have seen the highest level of violence since 2001. We desperately need to shore up popular support for Hamid Karzai's government. Today, there is a gap between estimates of what's needed to rebuild the country and what the international community has pledged in aid. About $8.6 billion over the next seven years would close it. Meanwhile, the country's main economic activity is growing opium for sale to the world's heroin dealers. The total value of the crop over five years is about $11 billion. If we were prepared to spend that much, we could follow a Center for American Progress proposal to pay Afghan farmers to not grow the stuff, taking the crops off the world market and giving the farmers breathing room to make the transition to cultivating something else.

4. International Security

Conservatives often deride the United Nations as ineffectual. The reality, however, is that U.N. peacekeeping has a very good track record (better, certainly, than the track record of unilateral American-sponsored regime change) in those instances where an appropriate level of resources has been available. A Center for Defense Information task force has proposed that we pony up an additional $5 billion over 10 years in financial support for these missions to make them more robust. The same task force also recommended that we sponsor the creation of a 5,000-strong standing international civilian police force under U.N. auspices that could act quickly in global trouble spots while the world's governments think out longer-term solutions. The American share of the bill would be about $2 billion over 10 years.

5. Transportation Security

On 9-11, the terrorists hijacked airplanes, and since that time a great deal has been done to make it harder to do exactly the same thing again. Nothing, however, requires terrorists to focus exclusively on airplanes as possible targets. Indeed, more recent attacks in London and Madrid have both come against rail transportation targets. The American Public Transportation Association estimates that fully securing American public transportation would cost $5.2 billion in one-time capital improvements and $800 million annually in new money for personnel, training, and technical support. The additional money would put security cameras in trains and train stations currently lacking them, place automatic vehicle locator systems in buses so emergency responders can find them in case of a problem, develop systems to detect hazardous chemicals, hire more security guards, and improve communications systems. The most recent federal budget boosted public transportation security spending, but it's still at around half the needed level -- even though public transportation has about 16 times the passenger load of air travel and the attacks in Europe show terrorists are just as happy to strike trains as planes.

6. Ports Security

News a while back that a state-owned firm from the United Arab Emirates may operate several American ports provoked instant outrage around the country. But keeping ports out of foreign hands is a small issue compared to the generally lax state of security at America's shipping facilities. The GreenLane Maritime Cargo Security Act, introduced by a bipartisan group of senators, is considered the gold standard in terms of preventing the smuggling of nuclear materials or other dangerous weapons through America's container ports. The legislation is languishing in Congress because deficit-conscious legislators propose to finance it through a roughly $20-per-container fee, which, naturally, the relevant businesses don't want to pay. The Gordian knot could be cut by letting taxpayers pick up the $1.5 billion annual bill (call it $15 billion over 10 years) to buy radiation detectors, establish a multitiered system of container security standards, boost grants to local port authorities, improve the U.S. Customs Service's existing Automated Targeting System, create a uniform data system for export and import information, and establish joint operating centers to facilitate day-to-day management of port security issues.

7. Airplanes Again

Much has been done to improve the security on America's commercial passenger jets. Much less has been done regarding cargo that's often carried in these very same planes. An estimated 55,000 tons of freight is shipped around the United States each day, with Congressional Research Service indicating that about a quarter of domestic shipping and almost half of international shipping is done on passenger planes. Legislation introduced by two congressmen, Republican Chris Shays and Democrat Ed Markey, would require 100 percent screening of all air cargo. David Wirsing, executive director of the Airforwarders Association, an airfreight industry group, noted in opposition to the bill that it would require "a cost of over $700 million in the first year alone." But this is actually a rather modest sum of money in the grand scheme of America's $450 billion and rising annual security budget. More genuinely extravagant would be equipping commercial airliners with defenses against the approximately 100,000 shoulder-launched missiles floating around the world at a price of $10 billion.

8. Emergency Response

More troops could improve America's security situation in a variety of ways. But terrorism isn't only -- or even primarily -- a task for soldiers. Civilian emergency responders -- cops, firemen, emergency medical technicians -- do much of the heavy lifting. A total of $5 billion would double the Assistance to Firefighters Grant Program, and $14 billion would fully fund the Community Oriented Policing Services Program, both for 10 years. Both programs offer financial assistance to state and local governments in maintaining adequate emergency response manpower. Meanwhile, as things stand, emergency response radio systems are still largely non-interoperable, a situation that had tragic consequences for New York City's police and firefighters on 9-11. Just $350 million could resolve the problem.

9. Public Diplomacy

Everyone acknowledges that fighting Islamic extremism has a large diplomatic component, oriented toward the hearts-and-minds question. A panel appointed by the Bush administration proposed a $12 billion increase in funding for public diplomacy over 10 years to help improve America's standing in the world, but it never happened. Throwing money at the problem won't solve anything on its own, but it would help. Extra cash could be used to upgrade the language skills of America's diplomats (according to the Government Accountability Office, 30 percent of language-designated public diplomacy positions in the Muslim world are filled with officers who lack the required linguistic ability), conduct audience research and segment target audiences as seen in the private sector, open more consulates in Muslim countries, and improve the quality and quantity of broadcasts in Arabic, Farsi, and other languages widely spoken in the Muslim world.

10. Development Assistance

OK, so far, assuming all nine of the above are funded fully, we've spent $228.65 billion, leaving around $1 trillion still unallocated. Where else should we spend it? Well, the war has also been justified on humanitarian grounds as a means of helping the Iraqi people and ameliorating political conditions throughout the Muslim world. In practice, however, starting wars (as opposed to, say, curing diseases) is a highly inefficient method of helping suffering people, and the war has devastated America's moral standing worldwide. Development assistance could massively improve it. The World Health Organization (WHO) estimates, for example, that a onetime expenditure of less than $500 million would allow the WHO to bring about a 90 percent reduction in measles deaths. This would save hundreds of thousands of lives over a period of years for less than what Congress appropriates per week for Iraq. Measles, as it happens, isn't a major problem in Arab countries, but Muslim Nigeria, Pakistan, Indonesia, and Bangladesh combine with India to account for almost 80 percent of the world's measles deaths.

Indeed, useful foreign-aid programs are generally so cheap that listing them one by one would take forever. Fortunately, there's a convenient aggregate at hand. Over the past several years the United Nations, in consultation with leading experts and potential donor governments, has formulated an ambitious foreign-aid program known as the Millennium Development Goals. Like most developed countries, the United States has agreed in principle to boost spending up to the levels called for in the goals but hasn't actually appropriated the money.

The goals, among other things, promise to reduce by half the proportion of people living on less than a dollar per day, reduce by half the proportion of people who suffer from hunger, ensure that all children complete a course of primary education, eliminate gender disparities in education, reduce the child mortality rate by two-thirds, reduce the maternal mortality rate by three-quarters, and reduce by half the proportion of people without sustainable access to safe drinking water. All this can be done by approximately 2015, according to the U.N., if the rich countries of the world increase their level of foreign aid to the promised level of 0.7 percent of GDP and reform current giving to conform to the targets. The total price tag for the United States would be about $1.04 trillion, which would represent a boost over current levels of about $650 billion.

11. Climate Change
In a May 10 Washington Post op-ed piece, University of Chicago law professor Cass Sunstein argued that "the economic burden of the Iraq War is on the verge of exceeding the total anticipated burden of the Kyoto Protocol." Sunstein's argument, predictably, came under attack from the right, but in fact he seriously understated his case. The estimated $325 billion cost of Kyoto refers not to direct budgetary costs -- most academic studies have concluded that these would be extremely small. Instead, the figure refers to indirect costs to economic growth. This is a large price to pay, but as with the rest it's significantly less than the economic impact of the war. On top of the $1.27 trillion in direct expenditures, however, Bilmes and Stiglitz also anticipate an additional trillion or so in indirect reduced economic growth. Without the invasion, in other words, we could have both gotten a jump on the emerging challenge of global warming and enjoyed higher levels of overall prosperity than we're seeing today.

* * *

Had we followed the course suggested above, the world would not only be a better place and the United States a more secure country; we would be in an infinitely better position to push the agenda of regional political transformation in the Middle East that now stands as the ostensible rationale for the Iraq venture. Beyond the mess in Iraq itself, our efforts at political reform have been persistently undermined by the United States' massive unpopularity in the Muslim world. A despised foreign power has little ability to influence events in a constructive direction, and at the moment the tendency is for political liberalization to merely boost the position of radical parties like Hamas in Palestine or the Muslim Brotherhood in Egypt. In the bargain, we would be saving around $400 billion -- hardly chump change -- that could be directed to domestic priorities.

Anti-Americanism has abated somewhat recently from its post-Iraq invasion peak, but it still remains incredibly strong in almost every Muslim country. The main exception is Indonesia, where the 2005 Pew Research Center survey of Islamic opinion registered an enormous 23 point jump in pro-American sentiments, a phenomenon virtually all observers attribute to our relatively generous response to the December 2004 Indian Ocean tsunami that devastated the country. The lesson is clear -- when the United States directs its counterterrorism efforts to genuine self-defense, and channels its idealistic impulses into uncontroversial popular causes rather than as add-on rationales for war-waging, world opinion looks more kindly on the United States. That gives us much more ability to do everything from pressing for political reform to trying to assemble a diplomatic coalition to block Iran's nuclear ambitions. Instead, America stands not only remarkably undefended against the possibility of terrorist attack, but also isolated on the world stage.

What's done, of course, is done and can't be undone. We can't unfight the war. The country can, however, still change course in a variety of ways. Some of these goals -- securing loose nuclear material comes to mind -- are sufficiently important that it makes sense to brush budgetary constraints aside. For others, like cargo inspections, it's worth doing the political heavy lifting necessary to get them financed by user fees if it's not possible to find the money in the general budget.

Budgetary offsets outside of Iraq could also do a great deal to help put us on the right track. The military spending priorities reflected in the most recent Quadrennial Defense Review are badly outdated, reflecting an orientation toward a no-longer-extant Soviet threat or a merely hypothetical Chinese one rather than America's actual defense needs. Not coincidentally, these priorities also reflect the defense industry's preference for hardware over manpower. Eliminating unneeded weapons systems like the F/A-22 Raptor plane, the Virginia Class submarine, the DD(X) destroyer, and the V-22 Osprey helicopter could generate more than enough funds to finance needed increases in special forces and peacekeeping missions. Cutting back on ballistic missile defense and America's overly large nuclear arsenal -- still, 15 years after the Soviet Union's collapse, a stunning 4,500 weapons, far more than are needed to hit any conceivable set of military targets -- might finance increased expenditures on homeland-security needs. On the foreign-aid front, much good could be done by simply reorienting current spending, much of which is not seriously targeted at helping the world's neediest, and incremental progress toward the Millennium Goals would do enormous good even if we don't reach the targets in a timely manner.

When you're in a hole it's always a good idea to stop digging. The total bill for the Iraq War isn't yet a fixed quantity -- it's still going on. Stiglitz and Bilmes assume, following the Congressional Budget Office, the existence of a small-but-continuous American military presence in Iraq through 2015. This estimate could, of course, prove mistaken (in either direction). But the sooner we get out of Iraq, the faster we'll be able to start directing our resources to more productive uses. Conversely, things could get much worse if, as some suggest, we launch a new war with Iran. To be sure, today's talk is of targeted airstrikes rather than full-scale war, but talk before the invasion of Iraq was of a $50 billion to $80 billion cakewalk, not a $1.27 trillion debacle. The odds of the Bush administration suddenly deciding to change course are low, but with the GOP on the ropes politically, Democrats have the chance to outline a serious alternative agenda if they care to seize it. The country can ill afford to continue down its current path.

Copyright © 2006 by The American Prospect, Inc. This article may not be resold, reprinted, or redistributed for compensation of any kind without prior written permission from the author. Direct questions about permissions to permissions@prospect.org.

Matthew Yglesias is a Prospect writing fellow.

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